NU Online News Service, Dec. 20 1:39 p.m. EST
State Farm Lloyds in Texas is asking an appellate court to rethink an order requiring it to refund $310 million in premiums to policyholders.
In April a Texas judge upheld an order against State Farm to refund $310 million, plus interest, to policyholders for alleged excessive rates from as far back as 2003.
Insurance Commissioner Mike Geeslin issued the order in November 2009. The insurer and the regulator have been battling in court ever since.
State Farm has compared the penalty to the cost it suffered from Hurricane Ike in 2008.
The insurer says it is looking to make sure it can fulfill the promises it makes to Texas policyholders and it is appealing the ruling because “the ruling could harm State Farm's ability to do that.”
“We believe the ruling is not supported by the evidence, and is contrary to Texas and federal law,” says company spokesman Kevin Davis, adding that the fact consumers continue to choose State Farm is evidence the insurer's rates are competitive.
The history of this dispute goes back about seven years, when Texas regulators ordered State Farm to reduce its rates. State Farm fought the order and won in district court but the Department of Insurance appealed and the matter was sent back to the department for review and reexamination.
Late in 2009, Geeslin issued his refund order to State Farm.
The insurer, the largest personal-lines insurer in the state, says the order “not only challenges State Farm financially, it creates an unstable environment for consumers and the insurance industry.”
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